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Under President Barack Obama, the government took steps to impose greater accountability on the industry and protect students from predatory schools. The policy is both just and cost-effective: For-profit schools saddle students with more debt and lead to higher default rates than traditional schools.
In 2016, the department issued the gainful-employment rule, which requires any educational program receiving federal student aid to demonstrate that its graduates earn enough money to pay back their loans. Another set of regulations, known as borrower defense to repayment, makes it easier for students who believe they were defrauded by for-profit entities to plead their case and discharge their loans. It also increases the liability of schools for paying back the federal government if student borrowers demonstrate they’ve been misled.
Betsy DeVos wants to reverse those reforms. Last summer she announced plans to rewrite both sets of regulations, though the process will take at least two years. Meanwhile, the Education Department is actively undermining the rules already on the books.
In July, DeVos delayed enforcement of the gainful-employment rule until next summer — a reprieve for more than 800 programs that had failed to meet minimum debt-to-earnings benchmarks. The department has extended the appeals process for failing programs and given schools more latitude to dispute the government’s data by simply supplying their own. And it has blocked for two more years the measures that would help defrauded borrowers get out from under their student debts.
In the meantime, the government has delayed processing any of the 87,000 claims from students who’ve requested discharge of their loans under the existing law and is considering a plan that would make defrauded students pay back a portion of their loans rather than receive full relief. The impasse has prevented some victims from getting mortgages, passing employer background checks or resuming their educations at other schools.
The Education Department says these changes will save taxpayers as much as $46 million a year. But in the long run, holding for-profit colleges accountable for predatory and misleading practices will save the public even more.
The Trump administration has every right to re-examine the efficacy of federal regulations. But weakening the government’s oversight of the for-profit education market is a bad deal for students and taxpayers alike.
—Bloomberg